Charitable Remainder Trust
Specifics on Remainder Trusts
These trusts can be created as a unitrust or annuity trust.
Charitable Remainder Unitrust:
The donor during her/his lifetime irrevocably transfers money, securities or real estate to a trustee (a bank or the Foundation itself) who pays the donor income for life. The trust can also provide income for donor's survivor (a spouse or others) for life, and the trust assets eventually benefit the LSSU Foundation. During the donor's lifetime all receipts are managed and invested by the trustee as a single fund. The donor cannot borrow or otherwise deal with the trust assets.
The donor receives payments based on a fixed percentage of the fair market value of the trust assets valued each year. The fixed percentage must be 5% or greater of the annual fair market value of the trust assets.
Donor gets a sizable income tax charitable deduction on her/his income tax return in the year he creates the unitrust. For example, a male, aged 70, funds a 6% unitrust with $100,000. She/He gets a contribution deduction of approximately $50,000 immediately upon funding.
The income received by the donor each year is often taxed as ordinary income or capital gain income or can even be tax-free income.
Charitable Remainder Annuity Trust:
The donor during her/his lifetime irrevocably transfers money or securities to a trustee (a bank or the Foundation itself) who pays the donor for life a fixed dollar amount annually. The trust can also provide income for donor's survivor (a spouse) for life or for the lifetime of others.
The donor determines at the outset the annual fixed dollar amount s/he wishes to receive. The amount must be at least 5% of the initial value of the assets used to create the trust.
During donor's lifetime the trust is managed and invested by the trustee as a single fund. The donor cannot borrow or otherwise deal with the trust assets.
The income received by the donor each year is often taxed as ordinary income or capital gain income and can even be tax-free income.
When the donor passes away, the remainder in these trusts is passed to the Foundation for the advancement of the University or a scholarship or program that the donor designates.
Trusts are considered taxable entities and need to be created by a knowledgeable financial advisor. A financial institution or the Foundation as trustee can manage these trusts. The Foundation reserves the right to have these trusts administered by a third party.
The donor should seek knowledgeable financial and legal advice, inform their family as they choose, and determine future financial need in creating such a trust.
Contact the Foundation for further information on these or other charitable gift plans.